Financial Management Basics for NGOs

Contents
Introduction .................................................................................................................................................. 3
What is Financial Management? .................................................................................................................. 4
Importance of Financial Management for NGOs.......................................................................................... 5
Process for developing Financial Policy of an NGO ...................................................................................... 6
Important questions to ask, before developing a Financial Policy for NGO................................................. 8
Structure of Financial Management Policy................................................................................................. 11
Components of Financial Management......................................................................................................13
Financial Management Staff & Responsibilities .........................................................................................17

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Introduction

Financial management is crucial for the success of any organization, be it private, government or non-
government. Successful enterprises watch their finances very closely and therefore take the right
decisions at the right time, ultimately leading to success. Most businesses have a well structured finance
department responsible for looking after the accounts and finances of the company. On the other hand,
NGOs most often do not consider financial management to be a priority and lack adequate financial
knowledge. This is often characterized by poor financial planning and adequate financial systems in
place.

Very often NGOs work effortlessly towards implementing projects that cater to the need of deprived
people and in this process do not pay enough attention to financial control. This practice makes the
NGOs vulnerable to financial losses. In the absence of proper backup plans and funds, NGOs are unable
to cope with funding crisis.

NGOs should realize that managing their finances is of critical importance and they should incorporate
necessary measures towards risk management, resource mobilization and budgeting. It is the
responsibility of NGO leaders to plan their expenditures and investments and manage funds in a way
that leads to a sustainable enterprise.

The purpose of this guide is to introduce NGOs to basic financial procedures and systems that are
required for efficient functioning of an NGO. By implementing the procedures and systems mentioned
in the guide you will be able to manage your finances and accounts more competently.

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What is Financial Management?

Financial Management is a vital activity in any organization. It is the process of planning, organizing,
controlling and monitoring financial resources with a view to achieve organizational goals and
objectives. It is an ideal practice for controlling the financial activities of an organization such as
procurement of funds, utilization of funds, accounting, payments, risk assessment and every other thing
related to money.

In other terms, Financial Management is the application of general principles of management to the
financial possessions of an enterprise. Proper management of an organization’s finance provides quality
fuel and regular service to ensure efficient functioning. If finances are not properly dealt with an
organization will face barriers that may have severe repercussions on its growth and development.

There are several options that one can use for managing their finances, this could be either managing
them on your own, hire a full time employee, hire a part time accountant or a third party who manages
all finance related activities for you, for example a Chartered Accountant.

Most often organizations have a dedicated department that looks after the financial matters of the
company. A finance manager is designated for handling finance and managing its resources within an
enterprise. All finance-related decisions are taken at this position. Depending on the company profile
the finance department can have several designations to cater to the various needs of the company.

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Importance of Financial Management for NGOs

As a NGO you might be thinking your primary task is to work towards social service and not financial
management. But unless your finances and funds are sorted, you cannot achieve your objectives. The
primary significance of financial planning and management in NGOs lies in achieving its overall goals and
objectives. Here are some points indicating the importance of financial management for an NGO.

 Being accountable to the donors: Most NGOs rely completely on funding and therefore having
proper accounting systems in place becomes all the more important. As a NGO you need to be
accountable to the donor agencies and individuals who support your cause. With proper
systems in place you can keep track of your expenditures and submit timely reports to them.
This would lead to enhanced trust between you and the donor, thereby increasing the chances
of your NGO getting a continuous support from them. With limited funding it is important for
an NGO to manage all the funds in a careful manner. Furthermore, proper finance systems will
also help the NGO maintain financial reports and showcase their entire spending to the
regulatory bodies as per the agreed terms.
 Securing future: The present financial condition of any organization determines its future. In a
similar manner, NGOs should also opt for sustainable use of finance. This simply means that
NGOs should spend in their present ventures, keeping in mind the future. After all, it is quite
important to have future plans and become well secured as well as future-ready.
 Eliminating fraud and theft: Malpractices and illegal deeds such as overuse of resources, fraud
and theft have become prevalent among NGOs. Firm checks are mandatory, for minimizing such
illicitness and preventing abuse of resources. With complete financial planning, coordination
and control, these issues can be easily addressed.
 Making productive decisions: With sound financial management, NGOs can make more
productive decisions concerning resource allocation, fund raising, fund mobilizing and other
undertakings. Good decision making skill enables right amount of funds to be invested at the
right place. Funds are therefore efficiently and optimally utilized.
 Achieving objectives: Every NGO is guided by certain policies and procedures, which are related
to its overall objectives. Each decision that is undertaken by the authority is driven towards
successful achievement of its set goals and objectives. Without organizing finance, it will be
difficult for the organization and its employees to reach its aim and fulfill purpose of its
existence.
 Enhancing credibility: Managing finance is a matter of skills and tactics that ideally changes from
time to time. With excellent finance management, NGOs enhance their image that enhances its
value and making them more credible. By framing well defined financial plans and policies NGOs
also earn good reputation within its community. They can also improve their current position
and look forward to gain trust, faith and reliability.
 Strengthening fundraising efforts: Most of the NGOs solely survive on its funds. Well organized
financial resources help in strengthening fundraising efforts by giving an overall idea about

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 available finance and the amount of finance that needs to be accumulated. Thus, employees get
a fair idea regarding the expected amount and plan their fundraising ventures accordingly.

Process for developing Financial Policy of an NGO

Developing a financial policy is a matter of time, effort and resources. Depending on the size of your
NGO, the time required for developing a policy may vary and may take anything between ten days to
few months. Once the first draft of the policy document is ready, it is it is reviewed and re-assessed to
make it relevant to NGOs overall mission and vision statement.

The policy is generally developed though a series of brainstorming sessions where board members,
senior team members discuss and formulate the policy.

Ideally, financial policies are developed in the following stages:

 Assessing the need: The very first step in making a policy is to understand its purpose. NGOs
need to address specific needs or objectives while making financial policies. Identifying the
purpose will give a strong foundation and base to overall policy development. Therefore, it is
the most significant stage in the policy making procedure.
 Identifying key roles & responsibilities: Once you the purpose of the policy, it is time to define
important roles and responsibilities according to expertise. At this stage, key members are
designated in their respective positions. Responsibilities are delegated to individuals, groups,
sub-committees or working group, depending on organizational structure and functioning.
Disseminating key roles also help in identifying important individuals/group, which shall be
responsible for various aspects of financial management. It also helps in categorizing scope of
financial tasks and activities and the lead person behind it.
 Gathering Information: While developing the policy you will need information related to
financial resources, assets and other available sources of financial data. All such data should be
accumulated, analyzed and then be used for framing initial policy content. It is best to gather
whatever information is available from the market and then classify. By doing so, it will give a
reflection of environment, factors and other features which might affect or help in making
financial policy for a Non-Governmental Organization.
 Drafting policy: While many NGOs do the initial draft in pen and papers, others prefer doing in
word doc. No matter which mode you opt, you need to be careful while choosing the words,
language, length, complexity, style and tone. Words must be simple, without any jargons. Do
not complicate the document that it is difficult to understand and implement its clauses. For a
policy to be fair, realistic and acceptable, it is important to have a structured approach.
 Consulting with appropriate stakeholders: Stakeholders play a major role in formulating
financial policies of NGOs. After the first draft has been prepared, it is best to involve the
stakeholders since they are the ones, mostly moved by policies. Stakeholders can be anyone
including individuals and organizations that might positively or negatively, directly or indirectly

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 affect or be affected by the activities stated in the policy package. In ideal circumstances,
stakeholders and policy-makers sit together and discuss about the potential implications of the
financial policy. Based on whether the NGO decides to develop its internal governance or
external policy positions, the appropriate stakeholders are consulted.
 Finalizing/Approving policy: After the stakeholder consultation, there may be certain changes in
the policy document. After incorporating the changes in the policy, the Management Committee
approves the policy. While approving the policy, the management committee discusses all the
aspects of the policy with financial heads to ensure that the policy will be fruitful and productive
in the view of achieving its objectives and meeting its purpose.
 Considering other procedures/measures: Whether for internal or external policies, essential
procedures need to be developed for providing necessary support. These procedures are
established after considering the need for clear guidance towards implementing the policy and
the responsible people behind the execution. All the procedure-related decisions, which will
further affect the implementation of the policies, are taken at this stage.
 Implementing: Once steps have been taken the clauses of the policy are communicated with
the target audience. Proper training and guidance is provided to the staff and volunteers to
support and enhance the quality of policy execution. Multi-national NGOs often conduct
conference to spread awareness about their financial policy.
 Monitoring & Reviewing: In order to ensure that policy gets implemented in the best possible
way, constant monitoring, reviewing and revision are done. It is seen that monitoring systems
and reporting modules are accessible and responsive. By establishing suitable reviewing
systems, policy heads can keep a firm check on overall execution of policy and be sure about its
proper functionality. In case it is seen that the policy has loopholes in certain sections, the same
is amended and fine-tuned for best results. Monitoring and reviewing gives an overall
assessment about the ultimate benefits of framing the policy.

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Important questions to ask, before developing a Financial Policy for NGO

Since preparing, drafting and making a financial policy consumes lot of time, policy-deciders must
consider the most significant and relevant factors, before getting into actual discussion about the policy.
Of all these factors, budget processes and systems within an NGO have maximum effect on financial
policies. Therefore, financial policy strategists ask potential questions to have clear understanding about
the overall organization and more importantly, its financial aspects.

After jotting the answers to all questions, financial policy strategists can consider it as a primary data to
proceed into further discussions about develop financial policy.

Q1: Does the organization have a board-approved budget at the beginning of fiscal year?

Budgets are one of the most important things to consider, while drafting financial policy. It is the budget
that determines organizational expenditures and helps in planning those expenditures throughout the
year. When NGOs have board-approved budgets before or at the start of fiscal year, goals and objectives
become clearer and stakeholders are guided to their actions.

Q2: Are the financial goals set before the beginning of budget development process?

Financial policy development is dependent on budget development and these policies must adhere to
the overall budget plan. Therefore, it is best for NGOs to have financial goals in addition to their overall
objectives, as a part of their annual planning process.

Q3: Does the budget development process include revenue budget and expenses by
program/function?

NGO budgets must be ideally constructed by a program/function, thereby giving proper insights and
clear understanding about the actual costs that needs to be incurred for conducting different activities.
Policies contain specific sections that are dedicated to planning revenue budgets and spending.
Therefore the budget development process affects these section plans.

Q4: Does the budget process include strategy development for funding overhead costs?

If budgets don’t define strategic development of overhead costs funding, then it is the financial policy
that needs to address it. NGOs are often faced with challenges such as securing funds for its
administrative costs, raising unrestricted funds and developing earned income streams. These
challenges must ideally get a solution either through budget or through financial policy.

Q5: Does the organization have year-end predictions at regular intervals throughout the year?

A clear understanding about where the organization is likely to finish the year, gives an overall direction
about financial policies. It also allows proper financial management and measuring the intended results,
both of which can be guided through the policy. Often NGOs draft their policy, at par with the budget to
address such predictions throughout the year.

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Q6: Does the organization have a process for evaluating funding avenues before applying?

When organizations have funding opportunity evaluation process, policies must clearly define strategies
for doing so and must support these processes. In case, such processes are not practiced, policies have a
dual role: to define the objectives and goals behind funding avenues and strategizing it for better
understanding.

Q7: At what intervals does the organization produce reports to the management committee?

Financial reports are submitted to the senior management, either on quarterly basis or on monthly
basis. While drafting a financial policy, this interval must be considered as the policy contains
information that will guide the management committee and help them in assessing if the overall
performance and progress of the organization.

Q8: Does the organization use dashboards to highlight key indicator performance?

Dashboards are nothing but visual representation of selected KPIs (Key Performance Indicators) through
which decision-makers are briefed about the current standing of the organization, against its set goals
and objectives. If the organization is not taking KPIs, then financial policies must address to such
important needs and state it under their evaluation and monitoring procedure.

Q9: When does the organization forecast year-end financial result?

Financial policies must be prepared through potential assumption of where the organization is likely to
end, from a financial perspective. Policy-makers can sit with finance heads and hear their views on this
aspect. Accordingly, policies should be made to ensure that its outcome aligns with organizational goals,
at the ultimate stage.

Q10: Does the finance staff have proper understanding about job descriptions?

One of the most significant points to be addressed in the finance policy is defining the roles and
responsibilities of all financial positions. Policies must consider recent up gradations in work and match
pace with current trends that are being practiced in other NGOs. Financial policy must clearly define
designations along with the bunch of duties and responsibilities.

Q11: Does the finance staff receive proper training and guidance?

Financial policies must address the need for proper training and guidance of its financial staff. It must
formulate strategies that will help in conducting training programs and sessions so that financial staff
gets more educated and are informed about their scope of work.

Q12: Are the finance staff aware about the organizational goals and objectives?

Since financial policies mostly cater to financial aspects with the organization, often the big picture gets
ignored. Therefore, such policies should ideally be prepared in a manner that will clearly communicate

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the organizational aims and objectives along with financial goals so that the financial staff can have
clarity in understanding overall objectives and how these policies are related to these objectives.

Q13: Does the finance office maintain an annual calendar of important events and activities?

NGOs have a continuous list of ongoing events, activities and ventures, round the year. Financial policies
must address the needs and requirements for carrying out planned activities, successfully. If events have
already been planned, policies must provide guidelines to govern and execute the destined activities.

Q14: Does the organization have fiscal workflow processes?

Fiscal workflow processes are designed to minimize manual data entry, reliance on paper and
duplicative work. Policies must define suitable technologies according to the fiscal workflow process of
the organization with a view to increase efficiency and reliability of operations.

After finding the most relevant answers to the above questions, policy-makers then start thinking about
all sections to be covered in the policy, specific sections that require more emphasis and new things to
be incorporated, if any. Accordingly, they proceed towards planning and drafting the financial policy of
the organization.

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Structure of Financial Management Policy

All financial decisions, activities and plans are done in accordance to a set of procedures that form the
basis of the financial policy. Once the financial objectives are confirmed, the next move is to frame
policies to guide its further proceedings. Financial management policy of an NGO is a manual that covers
all the accounting policies, procedures and systems of the organization. Primarily, there are two
purposes for framing a financial policy

 To look into proper governing of the financial transactions taking place in the concern so that
the staff can abide by the set procedures and
 To fulfill requirements of local statutory bodies and establish strong management practices, as
adopted by the NGO.

Principle of Financial Policy: While developing a financial policy it is a good practice to incorporate the
following seven principles suggested by experts. These principles lay the foundation of an effective
financial policy which would ultimately result into a healthy organization.

1. Consistency: The financial policy should be consistent, which simply means that it should not
allow manipulation of processes and systems. All the staff members should consistently adhere
to the financial policy and there should not offer much flexibility. A consistent policy will ensure
better accountability, transparency, better information dissemination and timely reporting.
2. Accountability: The financial systems should be such that it makes the organization more
accountable to its stakeholders. As an NGO all you should account for all the resources and its
expenses. For this the policy should clearly indicate the procedures for reporting and publication
of financial data.
3. Transparency: An organization should disclose all its operation and provide necessary
information to stakeholders. This means that the NGO should provide accurate and timely
information to donors, beneficiaries and all relevant stakeholders.
4. Viability: For an NGO to be viable in the long run, the policy should set in place a mechanism
that would maintain a balance between its expenditure and income. For any organization to be
viable it is important that team leaders are able to generate sufficient funds to continue the
functioning of the NGO.
5. Integrity: All team members should follow all rules set by the financial policy. As a founding
member you should set precedence in following and adhering to all rules.
6. Oversight: The policy should also provide oversight into the future and should accordingly
suggest measures to cope with future challenges. This would include risk assessment; strategic
planning etc.
7. Accounting standards: The policy should be such that it incorporates valid national standards
and protocols. The accounting systems should meet national and international standards of
financial accounting and recordkeeping this would facilitate easy transactions between diverse
funding strategies.

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Scope of Policy & Procedures: Financial management policy throws light on the procedures, systems
and accounting policies that are prevalent in the organization. The policy contains information about
input, output, processing, control and distribution of financial data. The accounting policies and
procedures are set out to:

 Make certain that the books of accounts of the NGO are carefully prepared to confirm its
accounting principles and practices.
 Enable NGO’s authority and management heads to procure timely and accurate financial reports
on every month. This also fosters stable financial management.
 Ensure that funds and other resources are being used in an accountable and correct manner.
Also, make sure that financial approach is in line with accounting principles and best practices in
reporting organization’s requirements.

This document is not just necessary for you to manage your finances and accounts, but this would also
help you in complying with legal protocols. The policy will cover the flow of financial data within the
organization that would ensure that the health of your NGO in terms of finances remains good. Having a
sound financial policy in place will certainly enable you in keeping track of the NGOs expenditure, basis
which you can plan your fundraising strategy.

Purpose of Policy & Procedures: Financial policies and objectives have the following significant
objectives:

 To provide assistance in maintenance of controls.

 To serve as a training and monitoring resource.
 To be a reference document to be used by the management, employees, auditors and
stakeholders.
 To increase accuracy and completeness of data that is posted from source documents (invoices,
journals, cashbooks, payment receipts) to the computerized system.
 To offer accurate and credible reports so that management can exercise effective control over
organizational operations.
 To detail-out the administrative and operational procedures for input, output, processing and
distribution of information so as to ensure complete security and privacy of files and
documents.

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Components of Financial Management

The most important section of a financial management policy of an NGO is the procedures for
accounting. The accounting procedures describe the methods that the organization has adopted for
maintaining daily accounts and carrying out day to day activities. The accounting policy describes both
the external and internal controls that are in use by the organization. Accounting system of an
organization should deal with the following;

Funding Agreement: One of the most important documents for your finance and accounts department
is the funding agreement between the donor and the organization. The agreement should typically have
details related to:

 Deliverables: Clear mention of all the deliverables that are agreed between the donor and the
NGO. both quantifiable and qualitative deliverables should be spelled out to avoid confusion at
a later stage
 Budget Breakup: The agreement should clearly specify the funds allocated for individual
activities. This will help you in spending as per the allocated funds and would reduce over-
expenditure.
 Deadlines: All the deadlines should be clearly mentioned in the agreement.
 Reporting procedures: Monthly, quarterly, annual reporting procedure both for narrative and
financial dealings should be specified.
 Fund release schedule: Procedure related to the release of payments should be clearly
mentioned.
 Clear demarcation of financial and non-financial aid.

Bank Accounts & Transaction: In most countries, registered NGOs have a bank account and prefer to
deal with their finance through banking facilities and services. The NGO financial policy should clearly
state the various procedures to be followed to ensure consistency in all transactions.

 Bank Accounts: Bank accounts for all project funds are typically opened in nationally recognized
banks or those banks which are authorized by the central bank of the country. Depending on the
laws related to your country, you can open a bank account for your registered NGO.
 Authorized Signatories: Depending on the resolution of your board, you can wither have a single
signatory or two-signatories for your bank transactions. Make sure your policy clearly spells out
who is the authorized signatory for all baking instruments.
 Manage Bank Transactions: Bank receipts are acknowledged by delivering an official receipt. The
date of receipt, its accounting as well as the date of depositing the cheque-draft to the bank
account are the same. In the policy also mention who will be responsible for managing all bank
transactions.

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Cash Handling & Transaction: Cash payments are firmly documented by NGOs in their financial
management policy. Small amount of cash payments are quite common on daily basis, therefore you
should have procedures to deal with such transactions.

 Cash Account & Transactions: Cash transactions are resorted in case of small expenses and
when/where banking services are not available. Refer to your country laws related to cash
payments and procedures set by law. In certain countries, there is a certain limit, exceeding
which no claims can be settled through cash payments and these should be by account payee
cheques only.
 Daily Cash Balance: Closing balance cash denomination are entered under the Daily Cash
Balance section and signed by the accountant. This register is usually maintained right from the
beginning of the financial year.
 Withdrawing Cash from Banks: When there is a need to withdraw cash from banks, make sure
that you use a Cash Withdrawal Form/Money Indent. This form should be duly filled up and
signed by the staff, involved in handling cash. Try to avoid cash transactions as much as possible
as they do not leave any accounting trail and hence can be questioned at a later date. If there is
no other option left then follow proper procedure so that the transaction can be recorded.
 Cash Payments: For making cash payments, most organizations use a payment voucher. All the
vouchers are printed and have an individual serial number. When a cash payment is to be made,
the voucher is approved by the responsible authority. The payee also signs the voucher on
receiving the payment. This voucher is then filled and recorded.
 Cash Verification: It is mandatory to verify the cash balance at the end of the month. The
competent authority ensures that the cash account record has been signed by the person
handling cash and the person handling finance. In case of any discrepancy noticed during this
period, the physical verification is recorded and reported in written document to the concerned
person immediately.

Controls to be exercised: Some of the important controls which are in practice include:

 No access to third parties towards the safe or accountant. Cash is only paid to third parties in
front office.
 Only one person is designated to handle cash and is solely responsible for it.
 A fixed time period is specified for cash disbursements. Emergency payments can only be
released during other times.
 Strict observance of minimum and maximum cash limits.
 Cash receipts/payments accounting is done on day-to-day basis.

Petty Cash: Petty cash is a system that is used for tracking small purchases that aren't suitable for check
or credit card payments. Petty cash is maintained based on imprest System (a form of financial
accounting system). The base characteristic of an imprest system is that a fixed amount is reserved,
which after a certain period of time or when circumstances require, because money was spent, it will be
replenished. Clearly specify a limit of imprest level in your policy. The accountant is the one and only
designated person for handling petty cash. Actual cash is checked on spot and then confirmed by the

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finance manager. The person in charge of funds will reimburse for any incongruity. All petty cash
requests are duly signed by authorized supervisor/finance manager on pre-numbered voucher.

Cash book maintenance: Cash book is a financial journal that contains all cash receipts and payments,
including bank deposits and withdrawals. The cashbook is an important bookkeeping document for any
organization. It is a book of entry which is prepared following a voucher for a particular transaction.
Maintaining a cashbook helps in keeping a record of all transactions in which cash/bank receipts are
involved. There are various ways of maintaining a single column cashbook or a double column cashbook.
In the former case, it also acts as a bankbook whereas in the latter, a bankbook should be maintained
separately.

 Cashbook is devoid of any alteration or cutting. Any correction fluid is never used in cashbooks.
In case of any mistakes, it is corrected by passing an entry of rectification.
 Cashbooks are regularly written to maintain transactions, up to date. Cash balances are also
inked up, on daily basis.
 The competent authority tallies, checks and signs the cashbook, on monthly basis.

Instrument Running
Date Particulars Debit/Credit Amount
No/Cheque No Balance

1/7/2016 Opening Balance 40000

Cheque Deposit
10/7/2016 XYZ agency 12345 Cr 10000 50000
15/7/2016 Cash to Self 20345 Dr 5000 45000
16/07/2016 NEFT XYZ - Cr 20000 65000

Stock & Inventory Management: Since NGOs receive good amount of funding, execute various activities
and expand their organization, they need to purchase goods and service. NGOs always organize their
purchase plans and incorporate the same in its financial management policy.

 Stock & Inventory Management: Maintaining a proper Stock and Inventory list prevents excess
purchase and reduces wastage. One should keep a register to keep a tab on Stock. Additionally
for large organizations following the 5S principles can be of extreme help. The five steps of 5S, in
Japanese, are Seiri, Seiton, Seiso, Seiketsu, and Shitsuke, which are translated into English as
Sort, Straighten, Shine, Standardize, and Sustain. The implementation of these principles
reduces inefficiency, abnormality, waste or unsafe condition in your office. The activities
performed in these steps, in short, are described as follows: Marking of re-inventory level for

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 stock can help in timely replenishment to prevent brake in work. The Stock and Inventory
registers should be audited and monitored periodically, preferable every fortnight.
 Purchasing: It includes identifying prospective needs for goods and services, identifying costs to
cover needs for those products, identifying potential suppliers and procuring at least three
estimates and finally getting into negotiation about trading terms and conditions. After mutual
agreement on payment terms, orders are placed. Goods/services that had been ordered are
received and paid. After complete payment, accountings and archiving expenditures are
prepared.
 Identifying the supplier: The most potential suppliers are identified by their credibility to supply
the requisites on time, cost-effectiveness of the commodities and quality of goods supplied.
Local and well known suppliers are more reliable to work with. While selecting a supplier, past
performance, reputation and availability are more emphasized. Also, it is ensured that the
supplier must comply with the rules and regulations, as stated by the Government. It is
advisable to take quotes from 3 to 4 suppliers before finalizing one based on quote and
reliability.
 Maintaining Stock Register: Stock Register keeps record of all goods that are purchased and
stored. Usually, an enclosed format is maintained while entering details in the stock register.
The stock register is preserved at the office where the goods are purchased or stored centrally.
With arrival of fresh stock, the register needs to be updated with accurate quantity and other
data. All requisitions taking place in the NGO must be numbered in duplicate. Two copies are to
be maintained: one for the central and the duplicate for the accounts. The records are entered
on FIFO (first in first out) basis. The stock registrar is designated for managing all stock records
and its aligned functions.

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Financial Management Staff & Responsibilities

Financial Management in NGO is undertaken by its governing body, board members and finance staff.

Governing Body: The body comprises of members from different committees of the organization such
as finance, public relations and project. Being the ultimate authority in any Non-Governmental
Organization, the governing body plays a lead role in financial department. According to the nature and
state of the concern, it is also known as Council or Board of Trustees or Board of Directors or
Governing/Executive Board.

Board of Members: The governing body’s plans and policies give a proper direction to the board
members. In an NGO, board members are at times volunteers (non-salary people) who are ultimately
responsible for the financial aspects of the organization. Although they might not control accounting
methods or prepare financial reports by themselves, however they must ensure that everything is
undertaken in proper order. They cannot refrain from their duties, during their association with the NGO
and can only do so by resigning from the government body. The board comprise of honorary officers,
who are appointed or elected to certain positions on the board. The main responsibility is to supervise
implementations of all board decisions and sign legal undertakings. It will be advisable to take
individuals who have experience in Financial Management such as Ex-Bankers, Accountants, Finance
Managers among others on board.

Financial Manager: The finance manager is the head of the finance committee in an NGO. Apart from
supervisory functions and monitoring responsibilities, the finance manager exercises the following
duties:

 Ensuring that all transactions are properly accounted for and the financial systems are
maintained, under all procedures and controls.
 Managing bank accounts and overseeing money transfers between head-offices, country offices
and field offices.
 Signing cheques, authorizing payrolls and other payments.
 Assisting and guiding the board by providing relevant financial information during budgeting,
accounts to donors and other decision-making activities. The manager does so, as and when
requested.

Financial Assistant: The finance manager is guided and assisted by the financial assistant. The main
responsibility is to report to the manager and implement work, as and when directed. The assistant role
should be preparing books of account, preparing cash memos, cheques and bills. He is the in putter for
the transactions for the finance manager and first level of financial control and management.

Admin Manager: Where finance manager and assistant have specific duties, the admin manager has
three-fold responsibilities: Finance aspects, HR and administration and logistics. The Admin has to take
overview and control of the hiring, inventories, stocks, and all other non specific activities. Since it is a
senior position it is advisable to have an experienced person on the job.

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Admin/Cash Assistant: The admin manager is assisted by the admin/cash assistant. The cash assistant
to admin manager is similar to that of finance assistant to finance manager, only that the functionalities
are different. The job of finance assistants majorly surrounds around financial resources, aspects and
matters, whereas the job of admin assistant spreads across various spectrum of duties, finance being
one.

In large NGOs, all the above posts are exercised by different persons. In small and medium NGOs, the
financial managers and assistants take the overall responsibility. In this case, the role of finance manager
also includes that of admin manager. In a similar manner, the job of financial assistant also includes that
of admin assistant. Irrespective of its size, there is a governing body and board across all NGOs.

Conclusion: To sum up, financial management is one of the most significant functions of any
organization, including NGOs. Financial control is at the heart of financial management. A well planned
and competent financial control ensures proper use of money, financially protected members and safe
assets. Financial decisions also effect on overall management and activities of NGOs. With proficient and
tactical finance strategies with changing time and circumstances, Non-Governmental Organizations can
successfully manage their financial resources and ensure steady growth and development within the
concern. With sound financial planning, organizing, coordinating, executing and finally reviewing; these
organizations can skyrocket their funds and achieve its objectives in the near future.

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August 4, 2016

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